In this economy, do you find yourself more willing to buy the ‘no frills’ brand?
According to the Private Label Manufacturers Association, 3 out of 10 consumers are buying more store brand products compared with a year ago.
And why not, it’s an easy way to save a few bucks. You probably know that store brands have lower price points, which is rather attractive in this economy – but you might not know that they also tend to have higher margins. (That’s according to the Marketing Science Institute.
That’s right. They’re more profitable.
And now some of the nation’s largest retailers are hoping to boost the bottom line by beefing up their house brands.
Target is spending big bucks to makeover its store brand by giving it a new name and getting rid of the familiar bull's-eye on the package.
Also, Wal-Mart is re-launching its Great Value private brand with more than 80 new products and distinctive packaging.
And Safeway and Costco are placing more emphasis on their brands.
With store brands making a name for themselves, how should you trade?
You might want to look at the companies that manufacture for these store brands, say the Fast Money traders. Check out Treehouse Foods and Ralcorp .
In addition, Steve Grasso thinks Wal-Mart is a buy on this news and Joe Terranova suggests Whole Foods, due to their popular 365 Everyday Values.
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Trader disclosure: On May 22nd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BBT), (EEM), (FLR), (TTM), (INFY); Seymour is Short (FCX); Terranova Owns (ABI), (JOYG), (XBI), (TER); Terranova Owns (DIS) Call Spreads; Terranova Owns Oil Futures; Terranova Owns Nat Gas Futures; Terranova Owns (DIS) Calls; Terranova Owns June Gold Futures; Grasso Owns (AMZN), (RIMM), (V); Grasso's Clients Own (AMZN), (PG), (X), (MA), (VA), (ALL), (AMP), (JPM), (WFC), (SUN), (PBR), (POT), (MOS), (MSFT), (IBM), (XLE); Najarian Owns (ISIS), (BCSI); Najarian Owns (APC) Call Spread; Najarian Owns (AMD) Calls; Najarian Owns (BX) Calls; Najarian Owns (INTC) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (MOS) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (XLU) Call Spread